Why Modi Government is buying Natural Gas From America??

In this video, we will discuss about first US LNG Cargo Shipment to India

First Ever American Shipment of LNG arrived in India!!


Reference - 

https://www.livemint.com/Industry/y5sOCgA7795Axw2hYgVOtO/First-US-LNG-cargo-shipment-arrives-in-Dabhol-LNG-terminal.html
https://www.deccanchronicle.com/business/economy/310318/india-gets-first-shipment-of-us-lng-gets-praised.html
https://www.reuters.com/article/india-gail-usa/indias-gail-renegotiating-lng-deals-with-u-s-companies-minister-idUSL4N1OI4A1
https://www.census.gov/foreign-trade/balance/c5700.html

Transcript -

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Last year, America has trade deficit of 22 Billion Dollars with India.





In comparisons to this, America has huge trade deficit of 375 Billion Dollars with China.



No wonder, while there is cold trade war going on in between China and America, India is smartly trying to avoid any direct trade war by buying oil and gas from America.



You may recall, Last year in the month of October, India received first ever crude oil shipment from United States.



Right now, 6.5% of our energy requirement is fulfilled by Clean and Cheap Natural gas. Modi government wants to increase this share to 15% by the year 2030.



Interestingly, In December 2011, Gas Authority of India limited signed 20 year Gas Supply deal worth 32 Billion dollars.



However, due to various reasons, this deal could not be implemented.



Because of change in market structure, Gas availability has increased and gas prices have slumped.

Therefore Modi government decided to renegotiate the prices for  5.8 million tonnes of LNG from the United States.



Though fourth Largest LNG importer India is rapidly expanding natural gas market, yet we have very price sensitive customers.



Thanks to hard bargain, India was able to secure very economical and highly profitable pricing from American companies, which were very reluctant to any price change in the 7 year old deal.



Due to sensitive commercial nature, pricing details are not publicly known, We would like to assume that we indeed have got good deal.



As result, Today India received first LNG cargo when a ship carrying super cooled natural gas arrived at Dabhol in Maharastra.





In future, Annually India will receive around 90 such cargoes worth 2 Billion dollars.



Friends, unlike China, we Indian want to have balanced trade with America, because we know, no friendly relationship can survive with huge annual increase in trade deficit.



In addition,long term oil and gas supply contract with America allows India to negotiate better deal with other oil and gas producing nations.



Few of us might have fear of backlash from Gulf countries and Russia. however these are pure commercial transactions with geopolitics involved in decision making.

That's where, the more supply options we have, the more bargaining power we will have.



Please find the reference links of this video in the description box below. Thank you friends.


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